Thursday, October 13, 2005

In a display of straight talking possibly never before seen in Detroit, Delphi CEO Steve Miller responded strongly following criticism from the UAW and the Governor of the State of Michigan to the Delphi bankruptcy. Labor's day of reckoning with Delphi was going to come eventually and Miller decided that Wednesday, October 12, 2005 was going to be the day.

(The Detroit News, Thursday, October 12, 2005) TROY -- Delphi Corp. Chairman Robert S. "Steve" Miller made a fiery defense Wednesday of his decision to take the auto-parts giant into bankruptcy and warned the company's 33,000 union workers to expect huge pay cuts by early next year.

In a tense press conference, Miller acknowledged for the first time the angry reaction from the United Auto Workers and other unions to his demands of 60 percent wage cuts at dozens of factories across the United States.

But the 63-year-old Miller bluntly repeated that he expected the UAW to agree to dramatic reductions in wages and benefits by mid-December, or he may ask the U.S. Bankruptcy Court to reject the current union contracts.

"Paying $65 an hour for someone mowing the lawn at one of our plants is just not going to cut it anywhere in industrial America for very long," Miller said, referring to the average combined wages, benefits and pensions of an hourly Delphi worker.

He also lashed out at a wave of criticism -- led by UAW President Ron Gettelfinger and Gov. Jennifer Granholm -- of Delphi's move to sweeten executive severance agreements just before Saturday's bankruptcy filing.

"Some people insist that fairness requires that we slash wages across the board," Miller said. "Well, I'm sorry. ... There are large disparities in this country and around the world in what people can expect for mowing a lawn versus managing a huge business."

Miller said he believed Granholm "did not fully understand" that the severance deals were necessary to prevent executives and top managers from quitting for other jobs.

"We are in a market for human capital," he said. "If you pay too much for a particular class of employee, you go broke. You pay too little, and you won't have anyone left to do the work."

Granholm spokeswoman Liz Boyd said Wednesday that the "governor stands behind her comments. I think the governor was very clear."

Miller also defended his $3 million signing bonus to join Delphi, "to replace all the other stream of income I was asked to give up." He said he expected to take a cut in his $1.5 million annual salary as part of the restructuring.

With extraordinary candor for a Fortune 500 chief executive, Miller said he did not fear a potential strike by the UAW because it would only make the restructuring of Delphi's U.S. operations harsher.

"I believe the United Auto Workers has competent, adult, honest leadership," he said. "Absolutely nothing can be gained from a strike at any Delphi facility other than to hasten and expand the number of plants that might have to be closed."

There was no immediate comment from the UAW on Miller's remarks.

What will be interesting to see is how Miller's tone affects GM's relations with the UAW. That day of reckoning is not far over the horizon, either.